pic by royblumenthal

Taking risks does not mean giving up responsibility.

The $50 billion dollar Ponzi Scheme provides a key opportunity for learning.  The delegation of due diligence comes with risks. Board members need to understand that delegation of their duty to be fiduciary responsible comes with first asking the right questions.  It is safer to get lower returns using investments that are clearer and understandable.  It will not leave doubt in your decision making.

Charities should have as an investment goal to preserve principle and aim for a conservative return of up to 5 percent.  In most cases that is achievable through government bonds or high grade corporate bonds.  (The key word is “up to”).  Greed is what got most individuals and institutions to ignore the need to conduct due diligence.

Out of the many effected I have noted below a few examples of whom to follow and whom not to follow as examples of conducting due diligence.

Those who did their due diligence 

•  American Jewish Committee
• Combined Jewish Philanthropies

Those who seemed to not have conducted sufficient due diligence and lost money.

• Picower Foundation (952 million)
• Robert Lappin Charitable Foundation
• Carl and Ruth Shapiro (145 million)

Those who had money managers whom seemed to not have conducted sufficient due diligence and lost money.

• Maimonides School
• Foundation of the Holocaust  (15.2 million)
• Yeshiva University (110 million)
• Tufts University (20 million)
• New York Law School (3 million)

Protect yourself and any organization your responsible for from being cheated:

1. If you are going to hire money mangers or investment advisers a simple rule is that they should never handle your money directly.  They would have you place your money with a brokerage firm, bank or mutual fund.
2. To ensure legitimacy at all times you should be able to see your account on line at any time.  If this is not available this should be the only warning you need to walk away.
3. If you can not confirm on your own the transactions made on your behalf then walk away.
4. If you receive statements from both a money manager and custodian, read them.  If there are any discrepancies contact the custodian immediately.  If your not satisfied with the answer or your uncomfortable, walk away.
5. If you can not get a meeting with your money manger, you should walk away.

If you think that the time and effort is such a pain or inconvenience to you or to the Board, you should consider not having the responsibility.